ABN AMRO Bank N.V.

Welcome to ABN AMRO's Q2 2026 analyst and investor call. Please note this call is being recorded, and for the duration of the call, your lines will be on listen only. Analysts will have the opportunity to ask questions after the presentation. This can be done by pressing pound key 5 on your telephone keypad. I will now hand the call over to the speakers. Please go ahead.

Good morning and welcome to ABN AMRO's Q2 2026 resource presentation. I'm joined today by our CFO, Ferdinand von Hacher, and our CRO, Serena Chiravanti. I will cover the key messages of progress on strategy and our financial results for the quarter. After the presentation, as usual, we will open the line for your questions. But first, let me begin with the key second quarter highlights on slide two. ABN AMRO delivered another strong quarter, supported by continued client activity and high fees. Net profit increased almost 30% year-on-year to $781 million, with return on equity improving to 12.1%. We saw continued business momentum with growth in lending and deposits. Commercial net interest income increased strongly, and we have raised our full year 26 guidance to around $6.8 billion, now including an IBC. Fees increased further, reflecting strong growth of 25 billion in client assets and another quarter of good clearing results. Progress on cost reduction is ahead of schedule, and we have lowered our full year 26 cost of guidance to around 5.5 billion, also including NIBC. Credit quality remains solid, with another quarter of limited impairments. Our pro forma CEC1 ratio strengthened to 15.9%, supported by growth in capital-like businesses. We set our interim dividend at 68 cents per share, based on 40% of our year-to-date net profit. These Q2 results reflect our progress on the strategic priorities of delivering profitable growth, right-sizing our cost base, and optimizing capital allocation. Let me now address each of these strategic priorities in turn. We are pleased to have completed the NIBC acquisition. It strengthens our position in attractive client segments and adds capabilities that fit well with our strategy. Including NIBC, we have realized around three quarters of our deposit growth ambition and around 80% of our mortgage growth ambition. In July, we announced the partnership between Worldline and ICS. This partnership will strengthen our credit card offering, enhance customer experience, and accelerate innovation. This outsourcing concerns up to 450 FTEs and will deliver further efficiency gains. Turning to wealth management. Client assets grew by more than 7% this quarter, reflecting strong market performance and commercial results that generated 2.3 billion of core net new assets. We are gaining traction in our priority segments, females, next-gen clients, and dual-client business owners. Inflows are typically higher in the second half of the year. So we remain on track to deliver between 5 to 7 billion of net new assets annually. Following the legal merger of HAL in June, our focus now shifts to the technical IT integration in Q4 and the delivery of synergies. Corporate banking is also on the right track with increased cross-sell and another strong quarter for clearing. We also continue to grow in sectors linked to European transition themes including defense. Now turning to our progress on the cost base. We continue to simplify our organization and improve efficiency. In the second quarter, FTE declined by around 250, mainly internal FTEs. While the pace of reduction has moderated, the cumulative FTE reductions are ahead of schedule at 45% of our 28 targets. Over the past year and a half, we realized around 300 million of our 900 million savings target for 28. The savings mainly reflect our ongoing organizational transformation and the streamlining of our IT landscape with a growing contribution from automation and Gen AI initiatives. We now have around 50 use cases in production, including our Gen AI, PowerPoint, VoiceBot, and a GenAI knowledge assistant for KYC and ANL analysts. As we scale, tokenomics helps us manage AI token use across its applications, balancing consumption with quality, risk, and business value. This enables us to select the right model for each use case. Recently, we also announced our partnership with Mistral. Access to European AI models is important because it gives us greater choice in selecting the right model for each use case. Now, turning to capital optimization. Since our Capital Market Day, we have realized 9 billion of RWA optimizations in total, including around 2 billion this quarter. Corporate banking has contributed 6 billion to these reductions, and achieved more than 60% of its strategic RWA reduction ambition. Looking ahead, we expect a number of significant RWA developments in the second half of the year. On the one hand, consolidating NIBC will add around 6.6 billion next quarter. This is expected to reduce OCT1 ratio by around 70 to 75 basis points. On the other hand, in Q4, the termination of the D&D mortgage floor, is expected to reduce RWAs by around 7 billion. The slide does not show several smaller items that will also affect RWAs. The annual update to the EBA property loss rate will reduce RWAs by around 1.5 billion in Q3. The sale of our personal loan business, our fund, will reduce RWAs by a further 1 billion in Q4. RWA increases are expected from business growth and potentially some other updates. These are harder to quantify today. We will conduct our capital assessment in Q4, or first under our distribution policy, of up to 100% of net profits. Now turning to the financial performance for the second quarter, starting with the Dutch economy on slide 7. Dutch GDP grew by a healthy 0.4%, The Dutch housing market has cooled somewhat following years of significant price increases, AMRO Bank N.V. AMRO Bank N.V. Resilient domestic demand, the healthy housing market, and gradually rising interest rates provide a supportive operating environment for the bank. Now, turning to client assets and deposits. Total client assets grew by just over 25 billion in Q2, mainly reflecting strong market performance in wealth management. Personal and business banking also delivered a strong quarter, a growth of more than 4.5%. The shift from cash and time deposits towards advisory and discretionary products continued. Client deposits increased over $5 billion. Growth reflected both seasonal holiday allowance payments and progress toward austerity conditions. And next quarter, NIBC will add to these numbers. Now, turning to commercial net interest income. Commercial N.I.I. increased 5% compared to the previous quarter. The main drivers for this increase were higher liability margins, strong clearing results, and higher liability volumes. To put some numbers around this, our liability margin improved by 5 basis points, driven by higher yields on our replicating portfolio. Average liability volume increased by $4 billion, reflecting both our strategic focus on deposit growth as well as seasonal effects. Finally, other commercial NII roles mainly due to increased financing demand from existing clearing clients and an expanding client base as we deliver on our clearing growth ambitions. Moving to assets. The margin there declined by two basis points, reflecting the high share of government-backed capital-like mortgages in new production. These capitalized mortgages are profitable, so this reflects only the difference in margin. Mortgage volume increased by 1.7 billion this quarter, with a market share of 18%. The market is currently very competitive, and we remain disciplined rather than seeking to maintain market share at all costs. Now, moving to our guidance for the full year. At the time of our Q1 results, geopolitical developments had pushed interest rates higher, but it wasn't clear whether those levels would persist. So, it was too early to change our NII guidance. Today, forward rates remain broadly at those levels, and we have just reported a strong interest result for Q2. We are therefore now in a position to raise our full-year commercial NII guidance to around 6.8 billion, including NIVC. As our chart shows, the interest rate environment continues to be a tailwind to a liability margin. For this year, we now assume other commercial N.I.I. of around 0.6 billion. This reflects higher clearing N.I.I. And from August 1st, we will book NIBC's N.I.I. in this line item. Following further integration, NIBC's mortgages and deposits will be booked in asset and liability N.I.I., Now, turning to fee and other income. Fee income increased 2% quarter-on-quarter and reached a record level. Positive market performance lifted wealth management fees during Q2. Corporate banking rose as well. Clearing continued its strong Q1 performance and cross-sell led to several large corporate finance deals this quarter. P&DD fees were broadly stable quarter-on-quarter. Other income improved strongly to $106 million. This was mainly due to favorable ALM results from economic ages. Together, record high fees and improved other income contributed to a 6% quarter-on-quarter increase in operating income. Now, turning to costs. Our priority is to deliver on our strategic targets which require disciplined cost management. N.V. N.V. N.V. Second half of the year costs will depend on the outcome of the collective labor agreement negotiations, which will resume in September. We are not updating our cost target for 2028. The remaining savings will be more spread over time, and the full cost reductions from synergies and outsourcing will only be achieved beyond 2028. We also need to invest in areas such as data centers, AI, cyber resilience, and commercial initiatives. That is said, our good start has created some headroom, but it is too early to change the target that we presented less than a year ago. Turning to credit quality. Credit quality remains solid, with a cost of risk of four basis points and a stable Stage 3 ratio at 2.1%. Our Stage 3 coverage ratio declined, and it is now around 14%, despite strong provisioning discipline. The decline relates to the derisking of our corporate loan book, the runoff and write-off of highly provisioned files, and the greater share of mortgages in the total portfolio. A recent backtest of our coverage ratio showed that it remained consistently above historical write-offs, even during downturns. Impairments were low at 24 million, despite ongoing macroeconomic uncertainty. They were largely attributable to a small number of individual files across various sectors. Following the renewed escalation in the Middle East, we maintained a higher weighting of our negative macroeconomic scenario for Q2. Overall, our credit quality remains solid, reflecting the strength of our loan book, proven risk management, and strong collateral across all our portfolios. Turning to our capital position, Our pro forma CET1 ratio increased to 15.9%. This improvement was driven by the quarterly profit, minus the 50% dividend reserve, and broadly stable risk-weighted assets. Our reported CET1 ratio, which deducts all profit in line with regulatory requirements, remained stable at 15.3%. Turning to the key RWA developments. Within credit risk, Business growth was largely offset by further RWA and portfolio optimizations. Lower market and operation risk contributed further to the decline in our RWAs. Our strong capital position enables continued investment in profitable growth while maintaining a robust capital buffer. Let me close with a key takeaway from the quarter. Today's results demonstrate disciplined execution against our strategic commitments. We advanced on our priorities of profitable growth, cost-based right-sizing, and capital optimization. Strong momentum continued across our core products and client segments. We completed the NIBC acquisition and now include its NII and cost in our full-year guidance. We raised our full-year commercial NII guidance to around $6.8 billion and effectively lowered our cost guidance to around 5.5 billion, both now, including an IBC. Our 15.9 pro forma CZ1 ratio provides capacity to invest in our strategy and pursue profitable growth. Year-to-date, with the bank tax spread evenly across the year, our pro forma return on equity was 10.9%, and our cost-to-income ratio was 56%, Thank you. If you wish to ask a question, please press pound key 5 on your telephone keypad. If you wish to withdraw your question, please press pound key 6 on your telephone keypad.

The next question comes from Giulia Aurora Miato from Morgan Stanley. Please go ahead. Hi, good morning.